03.05.19

Due to a technical issue with my web site Google is currently directing searches for “Better Known As Beaver Lake” (which is another site I maintain on a volunteer basis) to this blog. The proper link is www.betterknownasbeaverlake.org.

Here are the top 5 reasons that mandating roof-top solar for new residential construction in California makes no sense whatsoever:

1) Roof-top solar installations are much more complex and expensive than utility scale solar installations. Far more time is spent getting set up, rigging safety harnesses and moving racks and solar panels up to the roof than is spent actually mounting the solar panels. Electrical connections are also significantly more expensive requiring inverters at each home.

2) Roof-top solar installations are far less effective than utility scale solar installations. The roof pitch and north-south orientation of a roof is never ideal in terms of collecting the most solar energy. Houses are often surrounded by trees, hills, or high buildings which further reduces the solar energy captured especially in the morning and late afternoon. Utility scale solar panels are usually mounted on racks which move to follow the path of the sun resulting in much greater capture of available solar energy.

3) When solar panels are installed on a house the local electrical utility has to upgrade the equipment in the neighbourhood in order to handle the bi-directional flow of electricity in a system that was designed to distribute electricity, not collect it. Because the residents with the solar panels are actually spending less for electricity (and often actually collect money from the utility for electricity generated by the solar panels) the cost of these upgrades must be born by people that have no ability to install solar panels: renters, those living in apartment buildings, and those on fixed or low incomes.

4) The average life of a roof in California is about 20 years. That means that the entire installation of solar panels will have to be removed and replaced as part of the roof replacement. Solar panels do lose efficiency over time so that it would probably make sense in most cases to simply redo the entire installation which will be even more expensive than the initial installation because of the need to remove and dispose of the old panels.

5) California already has a lot of solar energy developed to the point where the excess generation at mid-day is becoming a problem. The only solution to that problem, and therefore the only way to make effective use of further development of solar energy, is the implementation of large scale energy storage systems. Whether that energy storage is through the use of batteries, pumped hydro storage, molten salt, or some technology that has not yet been commercialized, storage at individual homes will be dramatically less efficient and more costly than centralized energy storage.

There is an alternative that would provide far more benefit in terms of reducing energy demand for the entire life of a building and which would address climate change concerns far more effectively. That technology, already in widespread use, is termed geoexchange (implemented using geothermal heat pumps).

Geoexchange uses the constant temperature of the ground at depth to provide both heating and cooling of a building using approximately half the energy required by traditional heating and air conditioning systems. The cost of installing a geothermal heat pump would be a fraction of the cost of installing solar panels and geothermal heat pumps cut electricity demand in the late afternoon and evening – the peak demand times when California is still dependent upon fossil fuels and nuclear to provide power for lighting and air conditioning.

In cooling mode geoexchange takes advantage of the fact that the earth at depths of 50ft is much cooler than the air temperature.

In heating mode geoexchange takes advantage of the fact that the earth at depths of 50ft is much warmer than the air temperature. One of the most widespread ways to heat buildings is through the burning of natural gas in traditional furnaces. Natural gas is a fossil fuel and heating buildings using that energy source emits enormous amounts of carbon dioxide. Geoexchange, on the other hand, uses the earth as a heat source and heat sink to heat and cool buildings with no combustion of fossil fuels and no carbon dioxide emissions.

Geoexchange systems are integrated internally within the building so they do not have to be touched when roofs are replaced or other renovations to a building take place.

Reducing the energy requirements of a building using geoexchange, better insulation, and a host of other net-zero technologies is a much better approach than generating additional solar energy at mid-day which has to be stored or curtailed because there is no demand for it at the time it is generated. If California law-makers are serious about addressing climate change concerns, requiring geoexchange for all new buildings is the single most cost-effective measure they could ever introduce.

04.04.18

Many advocates of renewable energy point to Germany as the example of how to transform a large economy away from fossil fuels and therefore reduce carbon dioxide emissions. I have questioned the validity of that argument in posts in the past and the results from 2017 haven’t changed my opinion one bit. There are a lot of complexities in analyzing what is happening in Germany but the bottom line results are not very encouraging as far as I am concerned.

Here are what I would consider to be the “headline” numbers for Germany:

11% The reduction in fossil fuel consumption to generate electricity over the past 15 years

Since the beginning of the Energiewende in 2003, and despite hundreds of billions of Euros in subsidies and the second highest retail electricity rates in Europe to support those subsidies Germany has managed to reduce the consumption of fossil fuels very little.

9% The reduction in CO2 emissions from electricity generation over the past 9 years

Despite having deployed the third largest fleet of wind turbines in the world (behind only China and the U.S.) and despite having the third largest solar capacity in the world (behind only China and Japan) the German electricity generation sector remains, by far, the largest source of CO2 emissions in the country. In fact the modest reduction that has been realized in this sector is primarily due to a shift from coal-fired to natural gas-fired fossil fuel generation.

0% The reduction in CO2 emissions from all sources over the past 9 years

The modest reductions in CO2 emissions realized in the electricity generation sector have been completely offset by increases in Transport and Manufacturing. There is no possibility that Germany can meet its stated CO2 reduction targets for 2020. In fact, any further reduction in nuclear power generation will guarantee that German CO2 emissions increase.

Complete destruction of a rational import/export market in the regional grid

At the beginning of the Energiewende Germany was neither a net exporter or importer of electricity. At times of higher demand in Germany electricity was imported from neighbouring countries and at times of lower demand in Germany electricity was exported. This is a normal characteristic of a healthy regional grid where resources can be shared as needed. Gross German imports and exports were about 40 TWh each.

As more and more wind and solar was developed in Germany the sad reality of non-dispatchable resources started to become evident.

Solar and wind energy was forced onto the regional grid at random times when those resources were available without regard for whether or not there was any demand. Even ramping dispatchable generation up and down in order to try and match renewables was not enough (and, in fact, caused enough damage to one of Germany’s largest nuclear plants to force it to shut down). Only one option was left – export the excess electricity to Germany’s neighbours whether they needed/wanted it or not.

Over the years this trend has gotten worse and worse to the point where, in the last two years, virtually all additional wind and solar capacity additions have translated directly into increased exports.

Adding more solar and wind generation is no longer displacing any fossil fuel or nuclear generation in Germany itself. It may make for nice green-washed headlines (“Renewable power hits record high in Germany in 2017!”) but it won’t help Germany reduce its dependence on fossil fuels in any significant way. And in the meantime the impact of Germany’s “success” has created what Dr John Constable has described as a “curiously distorted market” in the Euro zone.

When the Energiewende began Germany had electrical generating capacity of about 100 GW from “conventional” generation sources including small amounts of hydro and biomass and, in addition, about 15 GW of Wind. By 2017 “conventional” generation capacity was still at about 100 GW but the nameplate capacity of wind and solar in Germany had grown to match that value. In other words, with electrical demand remaining flat since the beginning of the Energiewende there is now theoretically more than double the capacity needed to generate electricity in Germany.

And yet Germany still imported 30 TWh of electricity in 2017, down only 25% from when the Energiewende began.

How is that possible?

Once again, the non-dispatchable nature of wind and solar provides the answer.

On cold, calm winter nights no wind or solar energy is available (it should be noted that the high pressure systems that produce really cold weather are characterized by calm winds which I used as the basis for my post “The Fright before Christmas“).

Has the Energiewende been a success? I would have to say “No”

The German approach has done more to identify what doesn’t work than it has illuminated the path to a future powered by sustainable energy. Germany has essentially exhausted the capacity of the entire European grid to absorb uncontrollable wind and solar generation. That means that no other large country in Europe can do what Germany has done. Even within Germany itself the problems are now recognized and major reforms are under way – reforms that will inevitably slow the further development of wind and solar energy sources.

Massively scalable and incredibly cheap energy storage systems are required to deal with the intermittent and variable nature of wind generation, which has to be the primary source of energy in the mid and northern latitudes. Why only wind? Because at those latitudes peak electricity demand is in the winter when very little solar energy is available. And that peak demand will only grow more extreme as we go through the necessary transition to stop burning natural gas to heat our buildings.

I believe that the kind of energy storage systems that we need can be developed but they will require a lot more funding and support than they get today. There are other initiatives that can help as outlined in my Sustainable Energy Manifesto.

02.17.18

The development of renewable energy sources is taking place in all regions of the world and now attracts well over $200 Billion in investment annually. The various available technologies compete for these investment dollars and are evaluated based upon a number of commonly used financial measures. Such evaluations are made more complex due to various financial incentives including capital grants, feed-in-tariffs, production tax credits, capital depreciation schemes and other financial factors, which vary greatly between jurisdictions.

Two of the technologies that have the greatest potential to enable the transition to a sustainable energy environment invariably appear to be very expensive relative to wind and solar power and, as a result, have attracted very little investment. These are geothermal and hydro-kinetics.

The financial measures used to make these comparisons were initially developed to evaluate the investment opportunities between various dispatchable generation technologies (hydro, coal-fired, natural gas-fired, and nuclear plants). These measures do not provide a reasonable basis for comparing the value of dispatchable vs. non-displatchable renewable energy sources.

There is a very fundamental problem with references to CAPEX based upon the nameplate capacity of a wind development – a problem which many decision makers and almost all popular media reports fail to recognize. That problem is capacity factor.

For example, a 200 MW wind farm that costs $400 Million to construct will have a reported CAPEX of $2,000/kW. But if that wind farm has a capacity factor of 50% it will generate, on average, only 100 MW. Therefore, the effective CAPEX is $4,000/kW.

As a result, the capacity factor for a given development is a critical factor in determining the effective CAPEX for a wind farm. The table in the NREL report lists weighted average Capacity Factors of 51% for TRG1 to 12% for TRG 10 developments.

But what is the most likely capacity factor that can be expected from a wind farm developed in an area with excellent wind resource? The average for the Texas fleet, as reported by ERCOT, is 36% and Texas has some of the best wind resources in the country. Based upon that capacity factor the 200 MW wind farm described above would generate, on average, only 72 MW and the effective CAPEX would be $5,555/kW.

The situation with solar is far worse. The maximum capacity factors for utility scale solar developments, even in Southern regions of the country, are on the order of 28%. Solar capacity factors vary greatly based upon latitude, season, and local weather conditions. In Germany, with the second largest solar fleet in the world, the average annual capacity factor is 11%.

Assuming a CAPEX for utility solar developments of approximately $2000/kW (from the NREL ATB) the effective CAPEX for a solar development will range from $7,000/kW to $20,000/kW depending upon the capacity factor of the particular development.

Geothermal capacity factors (again from the NREL ATB) range from 80-90% with CAPEX ranging from $4,000/kW to $6,000/kW. Taking into account the difference in capacity factors geothermal CAPEX values are as good or better than onshore wind or utility solar. In other words, it takes the same level of up-front investment (or less) to produce a kW of electricity from geothermal as it does from on shore wind or utility solar.

There are no utility scale hydro-kinetics developments yet deployed but based upon numerous successful pilot projects it is estimated that the CAPEX for such projects would be 8,000-10,1000/kW with very high capacity factors.

Taking into account capacity factors the CAPEX for geothermal and hydro-kinetics developments is comparable to that of wind and solar projects.

PROBLEM #2 – Levelized Cost of Electricity (LCOE)

Another commonly used comparative measure is the Levelized Cost of Electricity. There are so many issues with LCOE calculations that it is almost not worth discussing this measure. Unfortunately, LCOE values are used widely and indiscriminately so the problems with this measure need to be addressed.

A graph of LCOE (again taken from the NREL ATB) demonstrates the uncertainty inherent in these calculations. The figures presented for geothermal are particularly disturbing, ranging from less than $50/MWh (EIA) to almost $400/MWh (NREL).

Without undertaking a “deep dive” into the NREL figures it is likely that the extremely high value for LCOE for geothermal presented by NREL derives primarily from financing costs.

The financing costs for generation sources that have very long service lives are difficult to evaluate and depend to a large extent on a number of assumptions. This problem has been discussed at length with regards to hydro dam developments.

The general approach is to amortize the cost of an installation over the service life. This is reasonable for wind and solar developments that are projected to have service lives of 20-30 years. However, geothermal installations can operate effectively for an indefinite period of time. The facilities in Lardarello, Italy have been in operation for almost a century. The Geysers development in California has been generating electricity for a similar period of time.

Financing any capital cost over more than 30 years results in the vast majority of total cost being represented by interest payments as shown below:

It would be more realistic to assume that the capital cost of a project was paid off using a “30 year bond” equivalent. This results in a step change LCOE consisting of a relatively high value while the debt for the facility is paid off after which there are only operating costs which are typically very low. The multi-generational LCOE using this approach is low and, to some extent, unknown as it will continue to decline as long as the facility operates. As an example, the graph below displays how LCOE changes after the capital costs have been paid off.

Problem #3 – The value of Peak Demand Availability

Almost every comparison of costs from different generation sources completely ignores the value of electricity generated at times of peak demand. This demonstrates a fundamental lack of understanding about the mechanics of the electricity industry.

For most hours of most days there is more than enough generation capacity available in any system. That is by design. A theoretical display of demand and supply is shown below for a region in the Southern U.S.:

The inability to dispatch wind and solar generation during those peak demand hours greatly diminishes the value of those assets to the utility. In fact, the utility will have to provide redundant generation assets in order to meet peak demand and, as a result, most utilities see wind and solar generation as a problem as much as an asset.

In Germany, neighbouring countries including Norway, Sweden, and France provide redundancy, whether they like it or not (they don’t). In Texas, the rapid development of natural gas peakers has been used to provide redundancy for wind generation.

The need to provide redundant generation is not addressed in comparisons of costs between dispatchable and non-dispatchable generation sources. Wind and solar are essentially given a “free ride” under the assumption that “some other generation source” will be available when wind and solar are not.

For wind generation it might be reasonable to factor in the cost of energy storage to cover periods of calm. But what does the “100 year calm” look like? Certainly it would be multiple days, probably a week or two. The amount of energy storage required to cover that length of time without significant wind generation would be enormous and the cost to provide such energy storage would be many, many times the capital cost for the wind generation facility itself. To get some sense of the enormity of this problem read the blog post by Euan Mearns calculating the amount of storage needed to get through a period of calm winds in the U.K. in 2015.

For solar in sub-tropical regions (south of about 35 degrees latitude) the problem is manageable because of the diurnal cycle of solar radiation and the fact that peak demand in this region typically occurs in the summer. Facilities such as the Solana Concentrated Solar Power plant in Arizona handle this by incorporating thermal energy storage.

North of 35 degrees latitude solar cannot be backed up in any reasonable way. The capacity factors decline precipitously in the winter months, exactly at the time when electricity demand peaks because of increased heating and lighting requirements. This trend will only become more extreme if we de-carbonize the economy by reducing the use of natural gas for heating purposes. Even if batteries or other energy storage technologies advance by an order of magnitude there would simply not be enough solar radiation to simultaneously provide power during the day and recharge the energy system for use at night.

Conclusion

Cost comparisons between dispatchable and non-dispatchable electricity generating sources are simply not useful. They are qualitatively different resources. Such comparisons have been very detrimental to the development of geothermal energy which represents a reliable and renewable energy source.

The question should not be “is geothermal cost competitive with wind and solar?”

The question should be “how do we develop geothermal resources as cost effectively and to the largest extent possible?”

And a second question should be “how to we commercialize hydro-kinetic technology so that it can play an important role in the transition to a sustainable energy environment.”

06.15.17

Note: Figures in this blog post were adjusted on December 12, 2017 to reflect the increase in capital cost for the Site C dam (from $9.1 Billion to $10 Billion). In addition, the calculations regarding the number of solar panels and associated costs that would be involved to generate the equivalent amount of electricity were changed to use cost and production data from the Sun Mine in Kimberley now that almost 2 years worth of actual data is available.

$36/MW-Hour

This is the most likely multi-generational cost of electricity from Site C. That should be compared to the $68/MW-Hour paid for Private Power Purchases that BC Hydro was forced to negotiate with for-profit companies. For a full discussion of how this number was calculated see my previous post on LCOE for hydro projects.

54 TW-Hours
This is the total annual electrical generation from existing legacy Hydro assets in BC. Site C will add 5 TW-Hours.

4.6 Billion liters
Amount of gasoline consumed in BC each year

=41 TW-Hours
additional generation which will be needed when all cars and trucks are electric (a certainty over the next 50 years)

5 Billion Cubic Meters

Annual domestic consumption of natural gas in BC

=52 TW-Hours

additional generation which will be needed when we stop burning fossil fuels to heat homes and businesses

28 Million
Number of solar panels that would have to be installed in BC to generate the same amount of power as Site C

$37 Billion
The cost to install those solar panels – and we still would have no power at night.

700
Number of wind turbines that would have to be installed in BC to generate the same amount of power as Site C

$5 Billion
The cost to install those turbines which would have to be located on pristine mountain-tops causing significant habitat destruction – and we still would have no power on the frequent days when winds are calm across BC. Note also that the best wind resources in the province are on the north section of Vancouver Island and Haida Gwaii. Installation of a larger number of wind turbines in these areas would likely encounter significant protests from environmental groups.

8 Minutes
The length of time that the largest battery complex in the world could produce electricity equivalent to the output from Site C

In Conclusion
If we think we’re going to need additional electricity capacity in the future why wouldn’t we build Site C now when interest rates are low? Do we think construction costs are going to decrease in the future?

Site C is the best renewable energy option for BC – for today

… and for future generations

This is an average value over the next 100 years with the first 30 years running at $107/MW-Hour while the capital costs are paid off through a bond bearing 4.5% interest and the next 70 years only with operating costs initially at $10 million/year escalating with a 1.5% rate of inflation. Details can be found in a previous post.

Gasoline Sales and Required Generation to power Electric Vehicles

Gasoline sales from Statistics Canada. Conversion to TW-Hours: 4.6 Billion liters of gasoline = 4.6 * .264 = 1.214 Billion U.S. gallons. The energy content of this is 33.7 KW-hours/U.S. gallon. Therefore the electrical generation required to replace the burning of gasoline is 1.214 Billion * 33.7 KW-hours = 40.9 TW-Hours. Second source: 34.2 MJ/liter x 4.6 Billion liters = 157 Billion MJ = 43.68 TW-Hours. To be perfectly fair electric vehicles are considerably more efficient than internal combustion engines but I have not included the 1.8 Billion liters of diesel fuel which has a higher energy content than gasoline and I have not accounted for any growth in the number of vehicles in BC in the next 100 years so I believe the 40+ TW-hours of needed electricity generation growth is very conservative.

Natural Gas Consumption and Required Generation to heat homes and businesses with electricity

The Sun Mine located in Kimberley came on-line in 2015. It is a truly amazing complex and represents the absolute best case scenario for solar in BC. Located in the southern part of the province with excellent solar resources and mounted on dual axis tracking racks, the Sun Mine achieves summer time capacity factors of 30% – better than Hawaii (by comparison the OASIS project at BCIT in the lower mainland has reported estimated capacity factors ranging from 2.8% in December to 14.2% in August).

The problem is that maximum electricity demand in BC is in the winter. During the months of December and January the Sun Mine has produced a total of 249 MWh over the past two years. During that time Site C would have produced about 1,700 GWh of electricity, almost 7,000 times as much if producing at a capacity factor of 55%.

The Sun Mine facility includes 4,000 solar panels. Therefore the number of solar panels required to match average Site C production is 4,000 x 7,000 = 28 million.

The Sun Mine cost $5.3 million to construct. Therefore to generate as much electricity as the average Site C output from solar would cost on the order of $5.3 million x 7,000 = $37 Billion.

Even this estimate for the cost of solar to replace Site C is far too low. During the winter months Site C is likely to be producing at much higher capacity factors than the 55% average. Based upon the Sun Mine, the cost for solar to fully replace Site C at maximum production would be over $65 Billion.

In order for solar to be available for the peak demand hours on cold winter nights some form of energy storage system would have to be used. At current prices the cost of battery storage would add another $4 Billion to the total.

Equivalent Number of Wind Turbines and Cost

Modern wind turbines vary in nameplate capacity from 2.5-3 MW. Average capacity factors for wind turbines in Germany, which has 47 GW of wind generation capacity (largest in the world) can be calculated from total generation of electricity of 77.8 TW-Hours to be 19%. The EIA reported a capacity factor of 34% for U.S. wind generation which is concentrated in very good wind resource areas in Texas and the prairies. On balance it would be reasonable to assume that large scale development of onshore wind in BC could achieve a capacity factor of no more than 30%.

Under that assumption the wind capacity required to match Site C would be .582/.3 = 1.94 GW which would require the installation of between 650 and 750 wind turbines. As reported by the EIA the average cost to install wind generation is $US1.9/watt which would translate into a cost of $4.81 Billion using current exchange rates. However, the average cost of installation in BC is likely to be considerably higher than the average cost of installation in the U.S. because of the mountainous terrain and the location of the best wind resources in relatively remote areas.

Amount of Time that the Largest Battery Complex in the World could Generate Electricity Equivalent to Site C

The largest battery complex in the world is being installed in Australia in response to a regional blackout that took place when a large wind farm stopped generating quite suddenly due to high winds. The capacity of this complex, the cost of which has not been revealed but has been estimated at $50 Million, is 139 MWh. The capacity of Site C is 1,100 MW. Therefore the theoretical equivalent time that the battery complex could replace Site C is 139/1100 x 60 minutes = 8 minutes.

The battery complex can only produce 100 MW output so to be absolutely accurate it should be stated that the battery complex could produce 9% of the output of Site C for 1 hour and 23 minutes.

04.28.17

One of my pet peeves has been a metric with the glamorous acronym LCOE which stands for Levelized Cost of Electricity. This is the “go to” number when evaluating electricity generation sources and comments about solar and wind reaching “grid parity” relate to this measure.

My annoyance comes from comparisons of LCOE for solar (PV and thermal), wind, and hydro which truly is like comparing apples to zebras. In a recent publication by the respected Energy Information Agency the following figures for Total System LCOE were presented in Table 1b;

These figures are similar to others I have seen published in many places and they have never made any sense to me.

My parents had a cottage on Lake Agnew in Ontario which was formed by the building of the Big Eddy dam in 1929. There are 5 other smaller dams within a short distance and I know that they are all still operating and producing significant value for their owners. Several are more than 100 years old and will not be decommissioned in the foreseeable future.

So it is clear to me that these dams produce the least expensive electricity that can be generated from any source. Why then is it that LCOE values for hydro are not dramatically less than other renewable sources?

After some investigation it has become clear that this is an issue that has a lot more to do with politics and “spin” than it does with anything meaningful. And the same problem applies to any capital intensive project that has a very long service life (for example, solar thermal with molten salt storage which has a major advantage over solar PV because it can generate electricity 24 hours a day to meet peak demand).

In this post I will focus on the “Site C” dam in British Columbia, currently under construction. For this particular project is is possible to say that the LCOE is $164/MW-Hour or $31/MW-Hour – neither statement is factually wrong but one is more realistic and more likely than the other (Note: all figures in this blog post were updated Dec. 12, 2017 to reflect an increase in the estimated capital cost for the dam – from $9.1 Billion to $10 Billion).

The large discrepancy in LCOE values demands an explanation.

The major factors underlying this wide variation in values for LCOE are the cost of capital, the time period being considered, and the forecast capacity factor for the dam.

Anyone that has purchased or has considered purchasing a house understands that the longer the amortization period the more you will end up paying for your house. If you paid your mortgage off in 20 years at a 6% interest rate you would end up paying about 1.8 times the purchase price (the total interest paid would amount to about 80% of the purchase price). If you paid the mortgage over 35 years at a 6% interest rate you would end up paying almost two and a half times the purchase price (note that I use 6% as the interest rate = discount rate because that is the BC Government mandated rate for assessing large capital projects).

Given that reality why would anyone choose a 35 year amortization period rather than a 20 year amortization period? Why? – because longer amortization periods require lower monthly payments. As a result there is always a trade-off between what a house purchaser can afford to pay each month and how much they will spend in total to purchase the house.

So imagine if you paid off your house over 70 years. Most houses are still being used for at least that length of time. Many houses in Europe are hundreds of years old. Choosing a 70 year amortization period would reduce your monthly payments even further but at a 6% interest rate you would end up paying over 4 times the purchase price for your house. That doesn’t make sense and banks don’t offer mortgages for more than 35 years.

But that amortization period is exactly what is used in the most commonly published LCOE values for Site C.

Now you might wonder why BC Hydro would choose that approach when it clearly results in the highest total cost for the Site C dam. Well, if you need to present the lowest LCOE during the amortization period then longer amortization periods give you lower numbers. That doesn’t make sense but the optics are better.

For example, if you used a more realistic amortization period of say 30 years the LCOE during that 30 year period would be around $138/MW-Hour. That is not a very attractive number. It also does not reflect the true cost of electricity that will be produced from this dam.

In order to understand the true long-term LCOE it is necessary to consider the period of time after the capital cost for the dam has been paid off (end of the amortization period) until the end of life for the dam.

How long will the Site C dam be in operation? There are many hydro dams in the world that are more than 100 years old and operating just as efficiently as when they were constructed. Personally, I think most of these dams will be in operation in a thousand years. Why wouldn’t they be? (the Cornalvo dam built by the Romans is over 1,800 years old!).

However, projecting service life beyond 100 years is a bit speculative so let’s leave it at 100 years. That’s what BC Hydro has done in published materials for Site C.

If a 70 year amortization period is used then the only costs for the dam over the last 30 years are operating and maintenance expenses which are very small compared to the capital cost. Although it is again highly speculative to try and forecast O&M expenses 70 years from now reasonable guesses result in LCOE values of $5-10/MW-Hour. Combining the costs during and after the amortization period for the Site C dam results in LCOE values of around $75-90/MW-Hour.

But what if a more realistic amortization period of 30 years is used? BC Hydro could easily borrow that amount on capital markets or issue bonds with that type of maturity. In that case the LCOE during the first 30 years (assuming 6% interest/discount rate) would be $138 but the LCOE taken over the full 100 years would be about $45/MW-hour. That’s a much more attractive number.

It will likely even be better than that.

The LCOE values quoted so far have been based not only upon 6% interest rate but also using a capacity factor of 55%. That is to say that the dam would only produce 55% of the electricity that it is capable of producing. The capacity factor will depend upon demand and water conditions.

Within the next 100 years all automobiles will almost certainly be electric drive which will significantly increase electricity demand in the province. But we also need to stop burning natural gas to heat our homes and businesses. The renewable alternative is heat pump/geoexchange technology which requires considerably more electricity than traditional heating systems. Burning huge quantities of diesel fuel in our railway locomotives also doesn’t make a lot of sense if we are trying to de-carbonize our economy. Electrification of the railway system will add another significant new load on the electrical system.

Finally, if Alberta follows through on its commitment to eliminate burning coal to generate electricity then there will also be additional demand on BC hydro power as a balancing resource for wind farms. Taking all these new system loads into account and barring a drought it is conceivable that the capacity factor for the site C dam could increase to as much as 75%.

And what about interest rates for a large loan? BC Hydro would be able to obtain capital at the most attractive rates possible for a loan of the size required for Site C. BC Hydro could issue a Site C 30 year bond at a rate of 4.5% which would be competitive with other high quality debt instruments.

Using an interest/discount rate of 4.5%, an amortization period of 30 years and a capacity factor of 60% would yield LCOE of about $36/MW-hour over 100 years. In my opinion that is the most realistic and likely LCOE for the Site C dam.

The tables below provide other values which indicate the sensitivity to amortization period, interest/discount rate, and capacity factor.

It it clear to me that hydro, amortized over a reasonable period, is by far the least expensive renewable resource available. More importantly, hydro power is available when it is needed each and every day because of its ability to follow system load. The only other renewable technology that can do that is geothermal and it is not available in most geographic areas (hydro-kinetic turbines would also be able to provide that kind of reliability and that technology deserves R&D funding and other financial supports).

For solar PV and wind it would only be reasonable to add a significant additional cost for energy storage or some other reliable generation source to provide power on calm nights. Those critical additional costs are conveniently ignored when comparing LCOE values for solar, wind, and hydro. As a result claims of “grid parity” for solar PV and wind are nonsense. Solar thermal with molten salt storage, on the other hand, is becoming a reliable and cost effective generation source in subtropical regions as demonstrated by a recent project by Solar Reserve being built in Chile.

One final note. It can be argued quite reasonably that those of us who will “shuffle off this mortal coil” before the Site C dam has been paid for will never see the benefits of the low cost power this dam will generate for decades or perhaps centuries in the future. So be it. We have, without question, enjoyed and will continue to enjoy some of the world’s lowest electricity rates because of the investments made in dam construction decades ago. As far as I am concerned I can imagine no greater legacy for our children and grandchildren than a source of clean, renewable energy that will last for their lifetimes and beyond.

04.05.17

I have complained previously about the misrepresentations published about renewable energy. In most cases the authors just seem to be so overcome with excitement about some new milestone achievement so that they lose sight of the big picture. But I recently ran into a post from 2016 that demonstrates more clearly than anything else I have read just how foolish these articles are.

“Renewable energy sources, taken together, covered 32.5% of German electricity consumption in 2015, while lignite provided only 26%. Since 1990 the electricity output from renewables has risen tenfold to last year´s level of 194 TWh. The year-on-year increase was also the highest on record – a staggering 31.6 TWh.”

The above statement is not true but it is not exactly a lie either.

A few paragraphs later there is another statement which only confuses matters further.

“This undisputed success was, however, muted by the fact that production from lignite and bituminous coal hardly declined (a decrease of a mere half-percent or 1.4 TWh). This is a problem since the German plan to battle climate change includes renewables replacing dirty coal-fuelled sources, thus lowering greenhouse gas emissions.”

The article goes on to state that German consumption has been flat for a number of years and that in 2015 exports reached a new high of 60 TWh, an increase of … wait for it … 31 TWh – almost exactly the same amount as the increase in renewables in 2015. That is not a coincidence. The last paragraph of the article speculates that the exports are from coal-fired plants when renewables are generating a lot of electricity. That happens primarily mid-day in the spring and on windy nights.

Attributing all exports to coal-fired plants is nonsense. An electron is an electron regardless of how it was generated.

The reality is that exports take place not because Germany’s neighbours need or want German electricity – up until now they haven’t had any choice but to deal with excess power dumped onto the regional grid by Germany’s uncontrollable renewables. That situation is changing as Germany’s neighbours begin to install devices to limit the flow of electricity between countries. Upon completion of those projects it could well be that German wind producers are forced to curtail the generation of electricity. That is already happening in Denmark where wind farms are paid not to produce power.

To my way of thinking there is some irony in the fact that within the Euro zone there is free movement of people but soon electrons will have to show their passports to cross national borders.

Considering the export situation it would be accurate in the first paragraph of the article to state that renewables represented 32.5% of German electricity production. To say that it represents the same percentage of German consumption is, at best, misleading because exports increased in lock step with renewable electricity generation.

The article also implies that coal-fired generators are “hanging on” by turning to the export market. The fact of the matter is that Germany’s coal-fired plants have to keep running so that they can provide power when wind generation disappears, which happens often. Utilities would actually prefer to operate their super efficient, low CO2 emissions Combined Cycle Natural Gas plants but they can’t afford to. Given that Germans already pay some of the highest retail prices for electricity in the world (largely because of levies to support the development of renewables) there is no appetite for the introduction of more expensive generating sources.

It is clear from developments over the past several years that increasing wind capacity in Germany further is literally pointless. When winds are blowing strongly there is already far to much electricity being generated and when winds are calm Germany has no choice but to burn coal – a lot of coal.

Given that the amount of coal burnt has actually increased over the past 6 years even as Germany built out the lion’s share of its solar and wind capacity, it is obvious that Germany has not managed to reduce its dependence upon reliable fossil fuel based thermal plants. It seems highly unlikely that the planned decommissioning of nuclear plants can continue unless there is a corresponding increase in coal-fired or natural gas-fired generation which would completely blow up Germany’s CO2 emission reduction goals (see this very comprehensive review of the situation for more details).

The lesson of the Energiewende is that some solar and wind can be introduced into the grid without causing too many problems as long as reliable generating assets are all maintained. But at some point the costs of adding more renewable generation far outweigh any possible benefits.

Getting one enchanted broom to help out with the chores is awesome. But having an army of out-of-control brooms doing the same thing just leads to a lot of spilled water. That’s where Germany is at. Just not as entertaining to watch.

03.18.17

Going on 4 years ago I wrote two blog posts outlining what I thought were the best case and worst case scenarios for the five years from 2013-2018 in terms of developments in renewable energy. Given recent events in the United States I thought it might be interesting to revisit those posts and see where we stand at the 80% mark.

In terms of the “best case” scenario I think it is fair to say that essentially none of the good things I had hoped for have come to pass.

2013: I was concerned that there would be a major grid failure in Texas because of the variability of wind generation. That didn’t happen and the Texas grid has been remarkably stable despite some growing pains and the necessity to build a lot of new transmission capacity. The 18 GW of wind capacity in Texas has been stabilized by more than 5 GW of new Natural Gas generation commissioned since 2013, a lot of it in the form of Peaking plants that can respond to the variability of wind generation.

However, the situation did come to a head in South Australia in the fall of 2016 where a large regional blackout was blamed (rightly or wrongly) on a rapid change in wind generation. Independent System Operators such as AEMO and ERCOT in Texas are very concerned about grid stability and continue to take steps such as authorizing the building of new natural gas fired plants to address any concerns. However, that stability will become ever more difficult to protect as more and more renewables are added to the mix. This article by Gail Tverberg provides one of the most comprehensive summaries of current and predicted problems that I have come across.

2014: I suggested that the defeat of Angela Merkel in the general elections could result in a serious slowdown of the Energiewende. As it turned out Merkel was re-elected but the slowdown is happening regardless. Solar panel installations have slowed dramatically as shown by the graph below.

Limitations have also been put on further development of wind energy and there is even the possibility that a significant number of existing turbines will be scrapped by 2020.

In my worst case scenario I warned that the development of solar energy technology in Spain was at risk. Very sadly in my opinion the advances made by Spain with Concentrated Solar Power installations, which can provide power in the late afternoon and into the night using molten salt storage, have come to a halt. The burden of subsidies that were used to support this development as well as the deployment of a large amount of wind generation have simply become too great. Although Spain continues to generate an impressive percentage of total electricity demand from Wind and Solar very little new capacity is being added as of 2017.

The last issue I discussed for 2014 was the probable closure of many coal-fired plants in the U.S. Moth-balling of coal-fired plants has taken place at a steady pace since 2013 due to concerns about CO2 emissions and the cost of meeting MACT regulations. Firm reserve capacity has not declined as quickly as I feared because there has been a “dash to gas” with the prolonged period of low natural gas prices.

2015:

In my “worst case” post I stated that even relatively minor levels of roof-top solar panel generation would cause so many problems in Hawaii that measures would be taken to end net metering which would effectively end the solar “boom” in the Aloha State. Those concerns have largely been realized. Solar permits have continued their downward trend, reaching new lows in January and February, 2017. Net metering has been stopped which I believe was necessary. There is the potential for roof-top solar installations in Hawaii to stagnate or actually decline as roofs have to be replaced and the economic value of solar panels in Hawaii does not justify the cost of re-installation.

2016-2018:

In 2013 I felt that the cumulative impact of the short-sighted development of wind and solar would lead to major grid issues throughout North America by 2016 and would force major policy changes and the rapid development of natural gas fired peaking plants. That hasn’t happened yet. What I failed to take into account was that there was already enough firm capacity in the system to meet peak electricity requirements including a healthy reserve before the development of renewables began. As a result adding wind and solar has just produced a situation where generation far exceeds demand at mid-day and during very windy conditions in many areas.

That cannot continue.

As Germany has demonstrated so well, coal-fired plants and natural gas-fired plants cannot be run profitably if they are only able to sell electricity when winds are calm and there is little sunshine. Economic pressures will mount, plants will close, reserves will reach critically low levels.

The path taken by Denmark and Germany has also effectively “poisoned the well” for the rest of Europe. Germany and tiny Denmark use the European grid as a dumping ground for renewable energy at mid-day in the spring and summer and anytime when winds are strong. Conversely, Denmark and Germany import energy like there’s no tomorrow when winds are calm at night. Germany’s neighbours are now moving to build a technological “wall” around the country that was once part of the stable foundation of energy generation for the continent.

What’s the Bottom Line?

Unfortunately I would have to conclude that we are measurably closer to the situation pictured above. The German Energiewende is grinding to a halt despite the constant greenwashing and attempts to minimize the growing problems. Solar is near its deathbed in Hawaii and other states such as Arizona and Nevada are following the same path.

Energy storage is the problem. Energy storage has always been the problem. That’s why rural electrification wiped out the windmills that were once commonplace on prairie farms.

But the good news is that energy storage is the only problem. With reasonably priced energy storage we could save up solar and wind energy when it is available and use it when we need it.

Energy storage should have been the first problem we tackled, not left as a “homework” assignment to be completed at a later date. And I believe there is still plenty of time to develop workable energy storage solutions. But to do that we have to stop this senseless outpouring of public funds to support further wind and solar developments. And to get politicians and funding agencies to make the necessary policy changes the general public has to come to understand that the current approach has absolutely zero chance of being successful.

The lobbyists for the wind and solar industries are not being truthful. Very sadly they have many allies in the form of well-meaning green energy advocates who fail to acknowledge that the development of wind and solar without energy storage is a fool’s errand. It will certainly make a lot of people rich but it will not transition our economy to use sustainable energy.

There are a few voices that are saying, in effect, the renewable “emperor has no clothes”. Euan Mearns, Gail Tverberg, Paul-Frederik Bach – I would like to think that I myself am on that list. We are not pro oil & gas, we are not anti-renewables. Quite the opposite. We are simply trying to point out, through thoughtful, objective and evidence based analyses, that renewable energy development is not headed in the right direction.

In 1881 French engineer Ferdinand de Lesseps, emboldened by his successful construction of the Suez Canal, initiated excavation of the Panama Canal. Eight years later the company sponsoring the project went bankrupt. About $400 million (in 1881 dollars!) vanished, poured into the muddy channels of the Culebra Cut and Gatún. Far more devastating were the deaths of more than 22,000 workers.

Twenty-five years later the Americans successfully completed the project. Better equipment and organization were important factors that led to that positive result. But the key to the successful completion of the Panama canal came in the form of simple metal cannisters strapped to the backs of 4,000 members of the “mosquito brigades”.

The French had not been defeated by engineering difficulties. They were overcome by a tiny but lethal enemy.

The Americans correctly identified the single most difficult problem they had to overcome in order to complete the Panama Canal. They had to keep their workers healthy.

Before the steam shovels started working a year-long war was waged against the mosquito. Buildings were fumigated, ditches and ponds were sprayed repeatedly or filled in. When work finally began there were still cases of malaria and yellow fever but not to the extent that the project was ever in jeopardy.

02.28.17

As anyone who has read some of my blog posts knows I do not believe that we should be basing our transition to a sustainable energy environment on the need to moderate climate change. I’m not convinced that eliminating the burning of hydro-carbons altogether would make a huge difference to what our planet is doing.

But having worked in the oil & gas industry for more than 25 years and despite the current glut of oil on world markets there is one thing I am quite sure of. We will run out of hydro-carbons that can be economically extracted in less than 100 years – I might even see a significant shortfall of world production and as a result much higher prices within my lifetime.

It would be reasonable to argue that predictions of “peak oil” have consistently been incorrect as higher prices and more sophisticated technologies have helped maintain production levels. But hydro-carbons, and crude oil in particular, are finite resources and they will eventually run out. As a result I have done some analysis of how much of a problem that could be and how quickly we need to address the problem.

First things first. How much energy is the world currently using and what fuels are meeting energy demand?

Trying to find accurate and consistent numbers on global energy consumption is much more difficult than it should be. I was struck more than once by the obvious bias towards inflating the impact of renewables and their role in meeting global energy demand. This is a phenomenom that I have identified in a previous post.

One good source that provides an overview of global energy use is the U.S. Energy Information Agency. Figure 1-5 from the International Energy Outlook 2016 provides data from 1990 onwards with forecasts to 2040.

The table below displays the data from this report for 2015, converted from Quadrillion BTU to TW-Hours.

LiquidFuels/Oil

Coal

NaturalGas

Renewables

Nuclear

Total

55,599

47,116

37,673

20,548

7,689

168,625

I always like to have multiple sources for information, especially when there are unit conversions involved. The following sources provide confirmation for the EIA report figures.

Oil:Bloomberg quoted an International Energy Agency figure for demand in 2015 of about 94 million barrels/day (bpd) which translates into about 58,293 TW-Hours which is within 5% of the figure provided by EIA. BP pegged the average amount as 92 bpd which would amount to 57,066 TW-Hours, even closer to the EIA figure.

Coal:Enerdata lists 2015 coal production as 7,800 Megatons which translates into 46,084 TW-Hours, very close to the EIA figure.

Natural Gas:BP listed Natural Gas production as 3,500 Billion Cubic Meters in 2015 which translates into 36,606 TW-hours. This figure is also close to that presented by EIA.

Combining these figures yields a figure of 139,742 TW-Hours for hydro-carbons compared to the EIA figure of 140,387.

Nuclear: Multiple sources including the World Nuclear Association and the Shift Project list global nuclear power production at about 2,400 TW-Hours rather than the 7,689 TW-Hours presented by the EIA. The EIA report itself presents 2,300 TW-Hours as the proper figure for nuclear generation for 2012 in Figure 1-7.

The source of the discrepancy is the difference between “Total Primary Energy Supply” and “Total Final Consumption”. “Total Final Consumption” discounts the energy used in generation, distribution, and conversion before reaching its final end user. Because hydro, wind, solar, and biomass all deliver electricity or heat to end users these sources are not impacted. Fossil fuel energy sources and nuclear are very significantly impacted. For example, in burning coal or consuming uranium fuel in a nuclear reactor to generate electricity more than 60% of the energy content of the fuel is lost as heat and through the limitations of thermodynamic engines. Therefore 7,689 TW-hours of uranium derived energy are consumed in nuclear plants to deliver 2,400 TW-hours of electricity to consumers.

Renewables: This is the category which has the most confusing and difficult to confirm backup data.

The best source of information regarding the complexities involved with renewables is the Ren21 network. The Global Status Report published by the group in 2016 and weighing in at 272 pages, is a great reference document although it also confuses matters a bit. The confusion comes because this report uses percentages of Total Final Consumption rather than actual consumption.

Using a global Total Final Consumption figure of 102,000 TW-Hours for 2015 (implied by the percentages for hydro and nuclear and roughly confirmed by the figure of 9,300 Mtoe on page 28 of the IEA Key World Energy Statistics) figure 1 of the Global Status Report can be reworked to present actual consumption rather than percentages, as shown below.

The aggregate figure of 19,692 matches the figure presented for renewables in the IEA report (20,548) quite closely. From the REN21 report almost half of this “renewable” energy is in the form of “Traditional Biomass” which represents the “use of fuelwood, animal dung, and agricultural residuals in simple stoves with very low combustion efficiency” (Note 12, page 201), primarily in undeveloped regions. Although this energy source is technically renewable it is certainly not one that we would want to increase or even maintain decades into the future. In fact the REN21 report points out that as the economic circumstances of a population improves these “Traditional Biomass” energy sources are replaced by the burning of hydro-carbons.

The largest category under “Modern Renewables” is “Biomass, Geothermal, Solar Heat” a large portion of which is produced in Combined Heat and Power (CHP) installations such as those common in Denmark. The economics of CHP plants are being under-mined by subsidized wind and solar power in many jurisdictions and as a result growth in this energy source will be severely constrained in the future.

The second largest category under “Modern Renewables” is hydro. Hydro has many very positive attributes including very low generation costs over many decades. It is a fact that almost all of the large installations developed in the last 100+ years continue to operate efficiently and reliably today. However, increasing environmental scrutiny and few remaining sites with significant potential will severely limit hydro growth in the developed world. There is significant potential in the developing economies but any new hydro power sources in those countries will be used to serve increasing domestic demand.

So in the end the job of replacing fossil fuels will come down to wind and solar (and hydro-kinetics and geothermal if they ever get the support they deserve).

The hype around wind and solar is amazing and very deceptive. It was extremely difficult to find reliable figures regarding actual generation from these sources although there was no problem finding hyperbolic statements about additions to wind and solar capacity. But commonsense tells us that because a solar panel can deliver 1 KW of energy between noon and 1 pm that does not mean that it can produce 1 KW of energy 24 hours a day, 365 days a year. Germany, with the second largest build-out of solar power in the world reports that solar generation over the course of a year is about 11% of installed capacity. Worse still, generation in the peak demand periods during the winter is almost zero.

Things are not much better with wind – maybe worse. Although wind generation continues to grow, availability of wind at peak demand times is unpredictable and inconsistent. On a cold, calm night in Northern latitudes (where more than 50% of the world’s population live) we will continue to be 100% reliant on fossil fuels until cheap and reliable energy storage solutions are developed.

But let’s assume that energy storage solutions can be developed sometime in the next few decades. How much wind and solar generation will be needed and how much will the development of those sources cost?

From the figure above wind and solar currently represent about 1.4% of the “Total Final Consumption” or about 1% of the “Total Primary Energy Supply”. According to REN21 the contribution of Fossil Fuels towards the “Final Total Consumption” is over 78%. A transition to 100% renewables will inevitably involve significant transmission and energy storage losses but for the moment lets ignore those. Therefore in the best case scenario wind and solar will have to increase by a factor of 78/1.4 = 55.7.

The development of wind and solar generation has been taking place aggressively since about 2004 when Germany started providing significant financial support for its Energiewende. Since then the world has invested more than $US 2.4 trillion in the development of renewables.

While it is true that the cost of renewable generation has decreased significantly during that time I would argue that the need to provide energy storage solutions and vastly upgraded transmission systems will more than make up for those savings. There will also be difficult challenges around replacing transportation fuels and finding new source materials for plastics and the many other products based upon petroleum feedstocks.

As a result the probable cost for the energy transition in constant 2017 dollars will be on the order of 2.4 * 55.7 = $US 134 Trillion. I think it will actually be much higher than that. That scale of investment would require that the world triple its current level of investment in renewables and maintain that higher level of investment for the next 100 years.

The next question is, do we have a hundred years to make this transition? I don’t think so. Peak oil is coming. That is inevitable. The date that peak oil will happen is the subject of heated debate. Some argue that oil production will start declining within a decade, others that production declines will not begin for many decades. Many major oil producing countries are already well past “peak oil” production.

Personally, I believe that a growing resistance to “fracking”, the rapid decline rates of tight reservoirs, and increasing demands for oil in developing economies will result in a permanent shortfall in oil production vs. demand by the middle of the century.

In a very thoughtful and I believe accurate article Robert Rapier postulates that peak oil is dependent upon price to a large extent. Higher prices allow the use of more expensive exploration and production techniques which bring to market supplies that were previously uneconomic. A graph from a 2008 publication serves to illustrate how unconventional sources may begin to play an important role in future years.

However, there will come a time when the input costs required to bring new production on stream exceed the value of that production. After that point in time oil production will decline monotonically.

In the decades leading up to that milestone event it will become more and more expensive to find and develop oil and gas resources which will lead to higher prices for fossil fuels. That reality will provide more incentive to develop renewables but it will also consume more and more of the world’s GDP to keep the hydro-carbon based economy functioning. So at a time when the world will need to spend ever increasing amounts to develop renewables and potentially on climate change mitigation measures rising energy costs will become a serious problem.

What’s the bottom line?

In order to transition away from a hydro-carbon based economy before oil and Natural Gas either run out or become prohibitively expensive the following must happen;

1) Investment in the development of renewables must ramp up to approximately triple what it was in 2016 and stay at that level for the next 100 years.

2) One or more very inexpensive and reliable (for decades) energy storage systems must be invented and deployed at a scale completely unimaginable today. To get an idea of how challenging that may be I invite you to read Euan Mearn’s analysis of the storage requirements to backstop wind in the U.K.

3) Peak Oil must occur after a significant percentage of the needed renewable generation is in place. It has taken 15-20 years to get to 1.5% of “Total Final Consumption”.

4) Global “Total Final Consumption” cannot increase or at worst must increase very slowly so that additions in renewable generation can displace fossil fuels. Inevitable increases in the energy consumption in developing economies must be offset by reductions in the energy consumption of developed economies.

Sounds tough, doesn’t it? But who among us doesn’t like a challenge?

And it could be worse. Consider the scenario described in this clip from Ghostbusters!

I think I will sign on to be one of Elon Musk’s first Martian colonists.

02.16.17

In searching for technologies that can aid in the transition to a low carbon environment the following characteristics would define the ideal new energy source;

Characteristic

Wind

PV Solar

Large
Hydro

Hydro-
kinetics

Geo-
thermal

Requires no fuel for operation

Reliable at peak demand times including winters in middle latitudes

Does not negatively impact the environment in a significant way1

Available in most geographic areas

1Of course some would argue that wind turbines and utility scale solar have negative environmental impacts but those are not severe compared to the environmental advantages of transitioning away from a hydro-carbon based economy.

From the table above the clear winner is hydro-kinetics which captures the energy of water flowing in a river without using a large reservoir. And yet this is the least developed renewable source on the planet. I would suggest that this ideal energy source faces challenges which are not technical but rather are political and regulatory. This posting will discuss the state of hydro-kinetic developments and suggest a path forward towards wide-spread deployment (this post focuses on river hydro-kinetics technologies deployed successfully in North America – there are other projects underway overseas but these face many of the same issues discussed here).

Hydro-kinetics – An Attractive But Elusive Technology

A number of companies have spent the last two decades attempting to commercialize hydro-kinetic turbines in one form or another. These companies have consumed, in aggregate, well over $100 million in Research & Development funding, have overcome many technical challenges and have staged numerous successful trial installations. However, despite the best efforts of talented and dedicated teams none of these companies have achieved a commercial deployment of a single hydro-kinetic turbine.

Free Flow Power

Free Flow Power developed a 40 KW turbine unit which was deployed in a test configuration in the Mississippi River near Baton Rouge for six months in 2011. The results of the tests were encouraging and the company undertook detailed site evaluations and identified more than 3 dozen locations on the Mississippi where turbines could be installed. A serious drought and low water levels in 2012 called into question the viability of many of the sites and the company decided to focus on retrofitting conventional turbines in existing dams that did not already have electrical generation facilities.

In late 2014 the company was split into a non-operating entity holding the Intellectual Property rights for the SmarTurbine and a new company, Rye Development was formed to pursue the dam retrofitting.

Hydro Green Energy

Hydro Green developed a 100 KW hydro-kinetic turbine unit which was deployed near Hastings Minnesota in 2009 in what is claimed to be the first licensed hydro-kinetic generating facility in the U.S. This turbine operated until 2012 when Hydro Green Energy, like Free Flow Power, decided to focus on dam retrofit.

Clean Current

Clean Current was a Hydro-kinetic company that developed several versions of turbines for use in both saltwater and freshwater environments. They conducted several tests of the technology, most recently at the Canadian Hydrokinetic Test Centre on the Winnipeg River in Manitoba from September, 2013 to May, 2014. At the end of May, 2015 it was announced that the company was being wound down after 15 years of Research & Development work.

RER Hydro

With substantial funding from the Quebec Government RER Hydro developed a technologically advanced hydro-kinetic turbine unit which was deployed in the St. Lawrence River near the city of Montreal in 2010. It functioned as designed for more than 4 years.

Based upon the success of this initial test the Boeing Corporation entered into a global marketing and distribution agreement for the TREK turbines in November, 2013. Phase II of the RER Hydro business plan involved the production of 6 additional turbine units in a brand new manufacturing facility in Becancour Québec opened to great fanfare November 11, 2013.

On April 7, 2014 the Parti Québecois lost the Provincial election. The new Liberal majority government immediately halted payments to RER Hydro that had previously been confirmed.

With turbine construction for Phase II well underway and purchase agreements being in place with suppliers RER Hydro was immediately short of funds. Shortly thereafter the company made a court application for the Issuance of an Initial Order under the Companies’ Creditors Arrangement Act which was granted. All RER Hydro staff were laid off in July, 2014 and after several further court applications what remains of RER Hydro is the Intellectual Property, some inventory related to the turbines being constructed and the contracts with the Boeing Corporation. The company was declared bankrupt at the end of 2015.

Verdant Power

Verdant has been working on tidal power turbines in the New York City area for more than 15 years. From 2006-2009 KHPS (Gen4) turbines were installed in the East River in a grid-connected configuration as part of the Roosevelt Island Tidal Energy (RITE) project. In 2012 Verdant was awarded the first commercial license for tidal power issued in the U.S. There is no indication that any turbines have been deployed or power generated in regards to this license.

Turbines developed by Verdant Power have been proposed to be installed as part of the Cornwall Ontario River Energy (CORE) project with $4.5 million in funding from various government agencies and utilities. The project has been ongoing since 2007 but it appears that in 2013 the project was abandoned.

In the spring of 2016 Verdant announced the formation of a partnership that will focus on hydro-kinetic projects in Ireland.

Instream Energy

Instream was formed in Vancouver in 2008. In 2010 the company, in partnership with Powertech Labs, deployed an array of 4 25 KW turbines near the Duncan Dam in British Columbia, Canada.

In August, 2013 a second demonstration site was established near Yakima, Washington State, U.S. As of August, 2016 the company has plans for 2 more demonstration sites in the U.S. and anticipates a project in Wales, U.K. in 2019.

Hydro-Kinetics vs. Wind and Solar

It seems clear from the number of successful demonstration projects that have been undertaken over the past decade that the engineering problem of manufacturing a hydro-kinetic turbine that can reliably generate electricity has been largely solved. It also seems clear that by combining the engineering expertise and learnings from several of the existing designs any residual problems can be resolved quickly and new designs that minimize fabrication costs could be developed.

The barriers to the implementation of hydro-kinetics are no longer technical.

Hydro-kinetics generation, like large-scale hydro and geothermal is qualitatively different from wind and solar power because it is reliable and dispatchable. As a result, a backup power source (natural gas-fired plants being the most popular alternative in the current low gas price environment) is not required. This is a very significant advantage which is not reflected in the various economic analyses that are used to justify regulatory and financial support for renewable energy.

In order to fully transition away from a hydro-carbon based economy it is necessary to have access to reliable electricity generation at times of peak demand. In the middle and northern latitudes (north of about 35 degrees) peak demand occurs in the late afternoon and evening as the requirements for light and heat reach their maximum. Obviously there is no solar power available at that time. Wind energy is highly variable and generally speaking cannot be relied upon to generate electricity during a specific time period.

The most valuable measure of the contribution of wind generation would be the amount of wind available during peak demand times. Very few organizations are willing to investigate that important metric because it would be hugely detrimental to the case for subsidizing wind energy.

“wind resource output is negatively correlated with load and often contributes to congestion at higher output levels, so hourly-integrated prices often overstate the economic value of wind generation”

The report states that the MISO practice of counting 13.3% of wind as reliable is much too high. They recommend instead that a value of 2.7% would be more appropriate (page 16 of the report).

If anyone was inclined to make a truly fair comparison of generation costs for wind and solar there would have to be a very large additional cost to maintain a reliable backup generation source for when wind and solar were not available. This would probably come close to doubling the true cost of wind and solar generation.

Hydro-kinetics sources do not suffer from this problem. They are reliable and predictable and can scale up to any degree without causing problems on the grid. No backup generation sources are required.

Hydro-kinetics generated electricity is much more expensive per kw-hour of nameplate capacity than wind and solar – probably on the order of $8-10/kw of capacity. But when reasonable capacity factors for wind and solar are considered (30% and 15% to be on the generous side) then the costs are not significantly different. But the very important advantage of hydro-kinetics is that it is reliable during times of peak demand.

As long as a KW-hour of electricity is judged to be of equal value no matter the source then wind and solar PV appear to be much lower in cost than hydro-kinetics.

The Value of a Hydro-kinetics Partnership

The barrier to wide-spread implementation of hydro-kinetic generation is not technical.

The primary barrier is the perception, widely held amongst renewable energy advocates, government officials, politicians, and funding agencies, that wind and solar PV are the best options to fight climate change.

Utilities, that have a deeper understanding of generation issues and understand the problems associated with wind and solar PV generation, are not actively engaged in the debate. This is because they largely see renewable generation as a nuisance that they have to deal with, like environmental regulations. They continue to build out new natural gas fired plants and even a few nuclear plants to provide reliable generation. They also are learning to manage rapid cycling of their plants in response to fluctuations in renewable generation.

Utilities do not own the majority of wind and solar farms and of course have no financial interest in distributed sources such as roof-top solar.

Finally, because they are either publicly owned, or earn an agreed upon return regulated by Public Utility Commissions, utilities are not particularly concerned about any additional costs associated with unreliable and unpredictable wind and solar PV generation. Whatever costs they have to incur, including maintaining a duplicate fleet of generation assets that can be available when wind and solar are not, will ultimately be born by the rate-payers, not the utilities. Consequently, utilities are not advocating for sensible options like hydro-kinetics.

The other perception, which is unfortunately firmly grounded in reality, is that hydro-kinetic generation has not been proven to be a really viable option at this time.

All of the hydro-kinetic companies discussed in this post are relatively tiny, privately held firms that are generally under-staffed and under-capitalized. That statement is not meant as a criticism – these firms have achieved remarkable engineering accomplishments and have overcome very difficult technical challenges. But it would not be much of an exaggeration to say that all of these companies are about one failed grant application or unsuccessful project away from bankruptcy. Several have already succumbed.

The only way to overturn the perception that wind and solar PV are better options than hydro-kinetics is through a very significant lobbying and public relations effort focused not only on national politicians in the U.S. and Canada, but also on regulatory agencies and utilities. Hydro-kinetics is a superior option. No exaggeration is needed to make the case. But the case does need to be made. Regulatory agencies and even utilities need to be strong advocates.

Politicians need to believe that additional support in the form of production tax credits or feed-in-tariffs as well as increased R&D funding are justifiable based upon the superior value of hydro-kinetics as compared to wind and solar PV.

At the moment a number of small companies are advocating different approaches and technologies using staff resources that have limited time and money to tell their stories. Decision makers are faced with trying to choose a “winner” which leads to no decision at all in many cases.

A partnership of these firms could fund a professional and credible full-time lobbying effort. As unsavory as that might seem to leaders focused on the development of hydro-kinetic technology the reality is that wind and solar PV already have entrenched and vocal proponents at all levels of government.

A partnership of these firms could also fund resources dedicated to interfacing with various regulators to understand their concerns and educate them with regards to hydro-kinetic technology.

Rye Development and Hydro Green Energy have extensive experience with the complexities of licensing facilities on the Mississippi, which has to be one of the primary targets for hydro-kinetic development.

Instream Energy, as well as former staff members from Clean Current and RER Hydro, have knowledge and contacts within the Canadian regulatory establishment. The Fraser and St. Lawrence rivers also have great potential for hydro-kinetic development.

Verdant Energy has had success with regulators with regards to tidal energy development.

The pooled expertise of these firms with respect to regulatory and environmental matters would represent a very significant resource to aid in the advocacy of hydro-kinetics in North America.

Would a partnership of hydro-kinetic firms require that some technologies be abandoned? Only if it made sense.

It is likely that collaboration on engineering issues under mutual non-disclosures would be beneficial to all parties, each of which would retain the Intellectual Property for their particular implementations.

Rationalization of the supply chain for major components and consolidation of some fabrication would reduce costs by increasing volumes even if the final products were quite different.

Centralization of some non-core administrative functions such as web site maintenance, legal services, and grant application preparation could be explored in order to reduce costs.

The “outside world” would benefit from having a single communications channel and a single core message representing hydro-kinetics. The various technologies being offered by partner companies would be presented as options to address a particular opportunity.

It would be possible to have competing solutions proposed for a particular project in some circumstances but that would not be ideal. It should be kept in mind that the real competition is wind and solar PV, not other hydro-kinetic technologies. It would be preferable for the partnership to advocate one technology for a particular opportunity based upon the geographic location and availability of support staff and resources. The possibility of supplementing staff at one organization with knowledgeable and experienced staff from one of the other partners would enhance the credibility of a response to any particular opportunity.

In Conclusion

Hydro-kinetics should be one of the most important foundations for a transition to a sustainable energy environment; more environmentally benign than large scale hydro, more reliable than wind or solar PV, and vastly scalable with every large river offering development potential.

Given the amount of investment and engineering effort that has been undertaken to date without attaining commercialization it seems clear that the current decentralized approach is not very effective. A hydro-kinetics partnership would allow the technology to attain critical mass without compromising the technical achievements that have been made or will be made in the future by partner companies.